As a friend of mine said to me last week, it seems the economic team advising Obama has an unfortunately limited imagination. This limitedimagination leads to a limited range of kinds of responses, as all aretied to "getting back to where we were" or "recovering,"–even in thelanguage used there are metaphors of recreating a past, or healingsomething like a hurt shoulder–recovering after bypass surgery– instead of creating a different kind of future.
One of the things I hope to do, blogging here over the next month, istry to be imaginative, and hopefully learn from the readers here abouta much greater range of ideas about how we might choose to organizeour economy: how we organize how things are made, how people are paid, and how risks are punished and rewarded. I think our short term solutions and responses ought be tied to long term structural protections against similar crises.
Recently, much of my thinking has involved antitrust policy. Instead of imposing after-the-fact regulations on corporations, why not pass a new antitrust policy that limits the size to which companies can grow? Current antitrust law limits a variety of anticompetitive behaviors, like price fixing, and is focused on consumer welfare and market manipulation. But antitrust could become a tool for limiting size qua size, not just size when it becomes anticompetitive. It would require a major overhaul, but in the long term a size-based antitrust policy might actually be simpler than the complicated and often unworkable measures of market share and examinations of inchoate consumer needs.
Why? Because economies of scale, which work well for creating widgets, are very dangerous when it comes to influencing political decision-making. Political power amassed by concentrated financial power leads to serious distortions in political decision-making, so that Congress can pass absurd, non-responsive legislation that gives illogical copyright extensions, dangerous environmental licenses, and tax breaks to those who least need it. Antitrust law now limits anticompetitive behavior as between companies within an industry; it could limit corporate power in the political sphere by creating a default maximum size.
Basically, we might want to use antitrust to create collective action problems for business–coordination difficulties and freerider threats–such that companies would be more likely to spend their energies on productive behavior instead of on political influence to modify the rules of the game. I recognize that this would lead to some less efficient production of goods in some areas, but that the cost of this inefficiency is worthwhile.